Rupee Plunges 26th Day in a Row After Exchange Companies Refuse to Sell US Dollars

The Pakistani Rupee (PKR) is slowly edging towards last year’s horrible lows against the US Dollar (USD) after falling for the 26th consecutive day today. Open market rates formed new resistance at 241-243 after going as high as 253 earlier during the day.

The PKR depreciated by 0.21 percent and closed at Rs. 230.89 after losing 49 paisas. It quoted an intraday low of 233 against the greenback before close.

The local unit was bearish against the greenback and opened trade at 231 in the open market. By midday, the greenback moved higher against the rupee to as high as 233.125. After 1 PM, the local unit slowed losses and stayed on the 232 level against the top foreign currency before the interbank close.

The rupee reported losses against the US Dollar today after exchange companies announced the removal of the open market price cap on the US Dollar. Markets were bearish after news that Pakistan and the International Monetary Fund (IMF) may finalize a schedule for formal talks soon to complete the stalled 9th review of the $7 billion Extended Fund Facility (EFF).

The Pakistani rupee maintained its downward slump against the US Dollar with open market rates as high as 252.5 after exchange companies on Tuesday removed the cap on the open market price of the greenback. Our channel checks have confirmed that exchange companies have received instructions to bring USD/PKR down to 243 in the open, but the rate is again expected to move closer to 252 as interbank trade approaches close later today.

Due to a lack of dollars, the spread between interbank and open market rates has widened significantly, harming the economy and diverting remittances from the legal banking channel to the grey market. The gap between the interbank rate and the open market rate has been higher than usual in recent months, while dollars are also being exchanged in the black market at an even higher rate.

Globally, oil prices fell on Wednesday, adding to the previous session’s loss, as an increase in US crude inventories and global recession fears outweighed optimism for a Chinese demand recovery.

At 4:10 PM, Brent crude was down by $0.16 or 0.19 percent to reach $85.97 per barrel, while the US West Texas Intermediate (WTI) was also red at $80 per barrel. Concerns about an economic slowdown weighed on oil as well. According to data released on Tuesday, business activity in the United States fell for the seventh consecutive month in January.

Crude has risen in 2023, with global grade Brent crude topping $89 a barrel this week for the first time since early December, thanks to the end of China’s COVID controls and hopes that U.S. interest rates will rise.

The PKR was bearish against most of the other major currencies in the interbank market today. It lost 12 paisas against the Saudi Riyal (SAR), 13 paisas against the UAE Dirham (AED), 19 paisas against the Canadian Dollar (CAD), 26 paisas against the Euro (EUR), and Rs. 1.78 against the Australian Dollar (AUD).

Conversely, it gained Rs. 1.75 against the Pound Sterling (GBP) in today’s interbank currency market.

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